Net sales at same level as in previous year, operating profit fell. Changes in the focus points for business operations in accordance with the new strategy that is being drawn up resulted in significant write-downs on long-term assets.

January - December 2015 in brief

• Order book declined 14% from previous year to MEUR 77 (MEUR 89).
• Consolidated net sales in the financial year totalled MEUR 495 (MEUR 495).
• EBITDA excluding one-time items and exchange rate differences on balance sheet items was MEUR 23.8 (MEUR 35.8). Reasons for the decline in EBITDA included wage inflation in Turkey, weaker developments in productivity than expected, and problems with quality in foundry operations. 
• Operating profit excluding one-time items and exchange rate differences on balance sheet items (”operating profit on business operations”) was MEUR 6.0 (MEUR 17.8) and including these items MEUR -23.4 (MEUR 2.2).
• The result after financial items excluding one-time items and exchange rate differences on operative balance sheet items was MEUR -19.4 (MEUR -9.5) in the year. The result after financial items excluding one-time items was MEUR -18.4 (MEUR -12.2).
• One-time items and exchange rate differences on operative balance sheet items that had an impact on the result after financial items for the review period totalled MEUR  -29.5 (MEUR -19.2). The company’s Board of Directors has started structural changes which will be implemented step by step until the profitability of the company meets its targets. The new strategy that is being drawn up has been redefined, and Componenta will focus on medium volume product series in iron castings and on aluminium castings, and aims to raise capacity utilization rates at all its production plants. The expected impact of the strategy being drawn up was taken into consideration in the impairment testing of assets, and write-downs on real estate and machinery and equipment were recorded as one-time items based on this impairment testing.
• The net result for the period was MEUR -82.7 (MEUR -28.6). During the financial year the Group recorded one-time changes in tax of MEUR -33.9. These mainly comprise write-downs on deferred tax assets in Finland, the Netherlands and Sweden. Due to low productivity the probability of being able to make use of tax losses has declined significantly in these countries.
• Basic earnings per share were EUR -0.86 (EUR -0.63).
• At the beginning of December Componenta started negotiations for a financing solution, which would support the new strategic alignments, ensure the company’s financial position and strengthen the balance sheet. In addition, negotiations began relating to the Nordic syndicated loan agreement because the company was not in compliance with certain terms of the loan agreement.  At the end of December Componenta signed a standstill agreement with the Nordic counterparties of the syndicated loan, according to which the lenders relieve Componenta from complying with the loan terms mentioned above for a fixed period. The agreement is in force until end of April 2016 and it contains typical terms for such agreements that the company has to fulfil for the duration of the agreement. The Group has long- and short-term loans from financial institutions of EUR 143.9 million maturing in 2016 and EUR 24.9 million maturing in 2017. Failure to comply with certain terms of the syndicated loan agreement and cross default terms have resulted in several debt instalments, nominal amount of EUR 63.2 million, being classified as current in the company’s balance sheet. The company’s liquidity was tight at the end of 2015 and early in 2016, and this has had a negative impact on the company’s production operations. Negotiations with financial and other investment institutions have continued at the beginning of 2016.
• Componenta published an announcement concerning the progress of financial negotiations on 11 March 2016.
• New contracts received during the year totalled MEUR 75.
• The Board of Directors proposes to the Annual General Meeting that no dividend be paid for the 2015 financial year.

October - December 2015 in brief

• Net sales were at a similar level as in the previous year, standing at MEUR 119 (MEUR 120).
• EBITDA excluding one-time items and exchange rate differences on balance sheet items was MEUR 0.1 (MEUR 5.4).
• Operating profit excluding one-time items and exchange rate differences on balance sheet items was MEUR -4.2 (MEUR 1.2) and including these items MEUR -34.3 (MEUR -9.0).
• The result after financial items excluding one-time items and exchange rate differences on operative balance sheet items was MEUR -11.6 (MEUR -4.9). The result after financial items excluding one-time items was MEUR -13.7 (MEUR -5.9).
• One-time items and exchange rate differences on operative balance sheet items that had an impact on the result for the October - December period totalled MEUR -30.1 (MEUR -10.5). One-time items include write-downs of MEUR -19.6 on machinery, equipment and real estates.
• The net result for the October – December period was MEUR -73.6 (MEUR -17.3) and the basic earnings per share were EUR -0.76 (EUR -0.18). The result includes one-time changes in tax of MEUR -35.5.
• The president and CEO of Componenta Group changed on 16 November 2015 when Harri Suutari, who had been chairman of the company’s Board of Directors, was appointed President and CEO.
• The objective of the new strategy that is being drawn up is to achieve a clear improvement in profitability. In future the company will concentrate on medium volume product series in iron castings and on aluminium castings, and aims to raise capacity utilization rates at all its production plants.

Dividend proposal

On 31 December 2015 the parent company had distributable equity of EUR 58.1 (204.1) million. The Board of Directors proposes to the Annual General Meeting to be held on 18 March 2016 that no dividend be paid for the 1 January - 31 December 2015 financial period.

Componenta’s guidance for 2016

Due to the financial situation of the company and the structural changes currently taking place, giving earnings guidance is exceptionally challenging. Because of this, Componenta is not for the time being making forecasts about its financial performance when commenting on its prospects.

President and CEO Harri Suutari comments on the review period and events after the end of period

”Componenta’s net result in 2015 was extremely poor. Despite its excellent customers and skilled personnel, and in spite of many measures taken and efforts to improve, the company’s financial performance has fallen short of its targets in the past few years, due to poorer developments than expected in productivity, high quality related costs, and tight liquidity over a long period. On top of this, the targeted cost savings have not been achieved as expected.

In order to reverse this trend, the company needs major structural changes. In November 2015 the company’s Board of Directors initiated changes, and progress will be made step by step with these until the company’s profitability is brought in line with its targets.

The new strategy that is being drawn up has been redefined and Componenta will in future concentrate on medium volume product series in iron castings and on aluminium castings, and aims to raise capacity utilization rates at all its production plants. In connection with this, a strategic review of the business structure will be carried out, and this will cover the possible closure or sale of production plants, transfers of production and other measures aiming to significantly improve profitability. The strategic review will cover all the Group’s production plants in the Netherlands, Sweden and Finland.

As part of the new alignments, Componenta’s organization management structure was clarified by dividing the business operations into five business areas. The organization structure was simplified by integrating into the business units the Group level sales, engineering, quality and customer service functions, with the aim of developing the core competences of the business units and clearly improving customer service and quality. Fixed costs will be cut with several measures, the most notable being the reorganization of the customer interface. In addition, in Finland personnel involvement in management will be improved by appointing an employee representative as a member of each business unit management team.

In the new management structure, profit and loss responsibility will be transferred to the business units. I believe that the renewed operational model will bring significant value to our customers and create a solid base for profitable growth.”

Key figures

*) Excluding one-time items and exchange rate differences on operative balance sheet items

Componenta’s Financial Statements Bulletin 2015 in pdf format is in the appendix to this release. It is also available on the company’s website at www.componenta.com.

Helsinki, 11 March 2016

COMPONENTA CORPORATION
 

Harri Suutari
President and CEO

ENCL. Financial Statements Bulletin 1 January - 31 December 2015

For further information, please contact:

Harri Suutari
President and CEO
tel. +358 400 384 937

Markku Honkasalo
CFO
tel. +358 10 403 2710

Componenta is a metal sector company with international operations and production plants located in Finland, Turkey, the Netherlands and Sweden. The net sales of Componenta were EUR 495 million in 2015 and its share is listed on Nasdaq Helsinki. The Group employs approx. 4,250 people. Componenta specializes in supplying cast and machined components and total solutions made of them to its global customers, who are manufacturers of vehicles, machines and equipment.